After a tough week last week, U.S. equities were able to put some green on the map to start the week. While it was a meager bounce, it was a bounce nonetheless. Let’s look at our top stock trades to start the week.
Top Stock Trades for Tomorrow #1: Alibaba
Click to Enlarge
Alibaba (NYSE:BABA) and other Chinese stocks have been under pressure over the past few months thanks to increasing worries over U.S. and Chinese trade tensions. However, BABA stock is under pressure Monday after a Friday-evening announcement that co-founder and executive chairman Jack Ma will step down.
That forced BABA below a big area of support between $160 and $165. Bears can short any rallies into this zone, provided BABA doesn’t close above it. Shares are now in “no man’s land” and bulls need to wait for support to show itself. That first possible spot is $145 to $150.
Top Stock Trades for Tomorrow #2: CBS
Click to Enlarge
More drama in the media industry? Big surprise. Shares of CBS (NYSE:CBS) have been highly volatile over the past few trading sessions, but currently finds itself above all three major moving averages.
However, downtrend resistance appears to be looming near $58. Short-term bulls may want to think about selling into that resistance; bears may consider shorting into it. Should CBS breakout over it, that allows low-risk shorts to cover their position and fresh breakout-buyers to step into the name.
On a pullback, look for trend-line support (black line) to hold. Below that, $48 is a strong buy.
Top Stock Trades for Tomorrow #3: General Electric
Click to Enlarge
We have remained bearish on General Electric (NYSE:GE) for some time and with good reason. InvestorPlace readers have saved plenty of money by avoiding this name so far in 2018. Only once we did we suggest a limited risk play on the long side for GE after shares broke out, but couldn’t hold onto their gains.
Anyway, downtrend resistance (black line) has pushed GE below what was support near $12.60 (blue line). On Monday’s rally, the stock is running into both levels.
If GE can push through this area this week, it may be worth asking if it’s bottomed (although the lack of volume creating that low remains suspect). More likely though would be a breakdown below $12 to new lows. Stay cautious on GE.
Top Stock Trades for Tomorrow #4: Intel
Click to Enlarge
With a similar setup to GE, Intel (NASDAQ:INTC) is not looking healthy right now. We have flagged this concern multiple times now and as INTC flirts with $46, an impending breakdown could be near.
Below $46, and Intel will enter no man’s land. The next big level of support doesn’t catch my eye until $42, although it’s not clear if Intel will fall that far should $46 fail as support.
Bears can keep selling into downtrend resistance and may consider adding to that short position should $46 fail as support. The relatively close price between downtrend resistance and $46 support is now too small to lure in the bulls for an attractive risk/reward. Buyers should avoid this name until Intel either gets cheaper or breaks out over downtrend resistance.
Top Stock Trades for Tomorrow #5: Ford
Click to Enlarge
Shares are rallying Monday as Ford (NYSE:F) responds to President Trump, but have been under plenty of pressure so far in 2018.
Simply put: regardless of the dividend or the valuation, this stock has been a mess for almost a decade. Excluding the dividend, Ford hasn’t generated a positive return for investors over an eight year stretch! That’s terrible.
The chart above is a nine-year weekly chart, so the levels aren’t to the exact penny. Now below that $9.50 to $10 area though (blue box) and near or below the bottom of downtrend support, F is looking worrisome.
There’s good support near $7.50, not that I believe Ford will fall to this level. But below $9.50, it’s not looking good. If global trade agreements between the U.S. and other nations improve, Ford should see a bounce. I at least want to see it above $10 before considering it on the long side.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
